Transport assessment and risk analysis: the case of the 2
ndfixed link across the Danube River
By
Nedyalka Mudova & Kim Bang Salling
Department of Transport, Technical University of Denmark n_mudova@abv.bg & kbs@transport.dtu.dk
Paper to be presented at the AAU Traffic Conference, August 24-25, 2009
The scope of this paper is to present a new methodology for appraising transport infrastructure projects. Conventionally, transport infrastructure appraisal is conducted by the use of cost-benefit analyses (CBA) in order to produce aggregated single point estimates (DMT, 2003). However, new research has proved that the embedded uncertainties within traditional CBA such as ex-ante based investment costs and travel time savings are of high significance. The paper investigates the latter two impacts in terms of the Optimism Bias principle which is used to take account of the underestimation of construction costs and the overestimation of travel time savings. By extending this principle into stochastic modelling in terms of quantitative risk analysis (QRA), so-called feasibility risk assessment is provided by moving from point (deterministic CBA) to interval (stochastic QRA) results. Hereby, decision support as illustrated in this paper will aim to provide assistance in the development and ultimately the choice of action, while accounting for the uncertainties surrounding transport appraisal schemes.
The main challenge when assessing transport infrastructure projects is to find a rational and trustworthy method to compare the advantages and disadvantages of the project, and to distinguish between the alternative characteristics of the project. Traditionally, cost-benefit analysis (CBA) is applied leading to a set of investment criteria that can be exploited.
However, these deterministic single point output criteria are based upon “best guess”
estimates of each input variable to the assessment scheme. Thus, the CBA depicts more of a most likely value of the transport project than the actual value. To distinguish the latter, various combinations for each input variable is normally selected creating a set of worst and best case scenarios. These combinations of possible values around the best guess are commonly referred to as “what if” scenarios. However, the assessment of transport projects increasingly requires a greater understanding of the complexity of alternatives and the underlying transportation impacts. Hence, the number of “what if” scenario combinations increases rapidly, making these type of analyses very confusing for decision-makers and stakeholder. Moreover, recent research exploits the concept of Optimism Bias to reflect the tendency for a project’s costs and demand forecasts to be respectively under and overestimated. The Optimism Bias is defined as the percentage difference between ex-ante (before) estimates of the appraisal and ex-post (after) values from the final outturn of the projects (MacDonald, 2002; Flyvbjerg et al., 2003) These levels of uncertainty can be applied in ex-ante based project appraisal studies, but they are currently disregarded in transport appraisal schemes in Denmark (Salling, 2008).
Manuscript received March 20, 2009
N. Mudova, corresponding author, is a master candidate at the Department of Transport at the Technical University of Denmark, Copenhagen, Denmark.
K.B. Salling is an assistant professor at the Department of Transport at the Technical University of Denmark, Copenhagen, Denmark.
To incorporate the latter two difficulties in transport appraisal schemes, this paper applies quantitative risk analysis (QRA) and Monte Carlo simulation. Thus, the QRA technique is very similar to a traditional sensitivity analysis, as it generates a number of possible scenarios.
Hence, the procedure effectively accounts for the two input uncertainties of “what if”
scenarios and Optimism Bias. The simulation procedure then goes one step further by generating a large set of values that each input variable can take and weighs each scenario by the probability of occurrence. Consequently, instead of receiving single point results, the decision-makers receive interval results in terms of an output probability distribution. An advantage of this approach is the possibility of incorporating expert opinions in terms of choosing the most suitable probability distributions and the determination of appropriate limits (intervals).
The combination of the latter three methodologies, CBA, Optimism Bias and QRA is applied using the CBA-DK model (Salling, 2008). Evidently, the CBA-DK model is applied upon a case study concerning the fixed link across the Danube River connecting the Northwestern part of Bulgaria with the Southwest part of Romania (Figure 1).
Figure 1. Illustration of the 2nd fixed link across the Danube River (UNECE, 2004)
The bridge, as a part of the European Corridor Number 4 (according to the second Pan- European transport Conference, March 19941), is representing an important connection between Europe and the Middle East. The lack of fixed links across the Danube River, the need for faster connections between Western Europe and Istanbul, as well as the desire for improvements in the infrastructure and the necessity for economical development in this part of the Balkans have led to the idea of constructing this second link over the Danube River.
Today, it is extremely troublesome to make the journey from Bulgaria to Romania, since the existing ferry line runs very unscheduled and slow.
Three kinds of problems accrue with the project: technical problems, which represent the difficulties appearing during the construction such as material specification, changes in the project, implementing problems etc.; organizational problems, connected with the co- operation and funding between Bulgarian and Romanian governments, companies, organizations, etc. and final administrative problems which mainly are due to the different legalizations in the two countries. The overall length of the link is approximately 2 kilometres
1 The Pan European Transport Corridor IV is a working group within the European Commission.
Details can be found on http://www.tinavienna.at/corridor4/.
and it will ultimately have 2 tracks in each direction together with an emergency lane and a bicycle and pedestrian lane. The estimated construction costs in current prices are set to
€106.3 mio. Currently, Bulgaria has no unique guidelines on how to perform socio-economic analyses, thus; fixed unit prices together with other standard measures are not directly available. Hence, this paper will apply Danish standards combined with various coefficients and parameters from the European commission, e.g. the IMPACT study (CE Delft, 2008) and TEN CONNECT (TEN CONNECT, 2008).
The main data for the fixed link project is collected from the Bulgarian Ministry of Transportation and other local authorities. These are the travel time savings, vehicle operating costs, construction costs etc. The information related to external effects such as noise, pollution, etc. on the other hand, is not directly accessible. Hence, correspondence with local and regional authorities together with relevant companies is made in order to access reliable data and parameters. Thus, most of the information/data will be collected through detailed articles and interviews published e.g. in the Bulgarian media or by the European Commission.
Additionally, there are tree prognoses for the future traffic, depending on the economical development in the region. Henceforth, the CBA will be done for each of the forecasts and will be compared with the existing (do nothing) situation. The application of ex-ante based Optimism Bias uplifts will be performed based upon studies performed in Denmark.
Consequently, the historical background of cost underestimations and travel time savings overestimations in Bulgaria is non-existing. A small section will therefore be devoted in investigating a few historical projects in Bulgaria similar to the proposed fixed link across the Danube River.
The paper will be structured as follows. The decision support model of CBA-DK is presented together with the case study as depicted. The model consists of the two types of analyses, as described above, resulting in feasibility risk assessment. For each method a sub-section in the paper is provided, together with detailed definitions all relating to the case study of the fixed link connection of Danube River. The Optimism Bias approach embedded within the deterministic calculations is then presented, together with conclusions and a more general discussion of the results.
References
CE Delft (2008). Handbook on estimation of external costs in the transport sector. Final report, produced within the study Internalisation Measures and Policies for All external Cost of Transport (IMPACT), Delft, The Netherlands.
Danish Ministry of Transport (2003). Manual for socio-economic analysis – applied methodology in the transport sector. Copenhagen, Denmark (in Danish).
Flyvbjerg, B., Bruzelius, N. and Rothengatter, W. (2003). Megaprojects and Risk – An anatomy of ambition. Cambridge University Press, Cambridge, UK.
MacDonald, M. (2002). Review of Large Public Procurement in the UK. Report prepared for the HM Treasury, London, UK.
Salling, K. B. (2008). Assessment of Transport Projects: Risk Analysis and Decision Support.
Ph.D. Thesis, Department of Transport, Technical University of Denmark, Copenhagen, Denmark.
TEN CONNECT (2008). Traffic flow: Scenario, traffic forecast and analysis of traffic on the TEN-T, taking into consideration the external dimension of the Union. Final draft report, Trans European Network, December 2008.
UNECE (2004). Bridge over the Danube River between Vidin (Bulgaria) and Calafat (Romania). Technical Report, United Nations Economic Commission for Europe (UNECE), Geneva, Switzerland.
